Mirroring Home Depot shareholders, the shareholders of General Motors voted in favor of a majority vote proposal for directors at today’s annual shareholders’ meeting. Giving the current trend in favor of such results, the vote was probably not surprising. However, it does mark the first time GM shareholders have ever voted in a manner different from the GM board’s recommendation. Apparently riding on the coattails of the general push for voting reform, shareholders also voted in favor of a proposal to allow cumulative voting for directors. The meeting represents the 20th time a cumulative voting proposal has come before shareholders, but the first time it has received the support of the majority of GM shareholders. Other corporate governance measures such as separating the chairman and CEO position did not receive majority support. The success of the voting reforms at GM should serves as a strong signal not only to GM, but also to state and federal legislators. Certainly Delaware is considering reform—and recent events give state legislators a lot to consider.

The success of these shareholder proposals demonstrates that shareholders do and can exercise their voice. Of course, the fact that a number of recent proposals have received majority shareholder support reveals that if the director voting system changes, shareholders have the ability to generate the necessary votes to defeat nonperforming directors. In this regard, the impact of voting reform appears more than just theoretical, but threatens to change director elections and even corporate governance in a fundamental way.

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1. Posted by Robert Schwartz on June 6, 2006 @ 21:43 | Permalink

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